"Risk" is an important concept, but the word means different things to different people. Lawyers and businesspeople often find themselves tussling over the definition of what constitutes a "risk", whether that risk is significant, and - crucially - how to respond to it. Unfortunately, because each profession is steeped in its own culture, context, concepts and vocabulary, it can take time for a young lawyer to even realise that their business clients mean something different when they use the word.
How lawyers think about risk
Lawyers are trained to start from, well, the law. And so they tend to assess all actions in relation to the legal consequences of those actions, and assess all situations in terms of their legal or regulatory context. I am oversimplifying this to make a point, but broadly speaking a tort lawyer will might well define risk as "the likelihood of exposure to legal liability". Similarly a lawyer who represents clients before tribunals or regulators might define risk as "the likelihood of an adverse finding". Lawyers who focus on contract and commercial law, or on transactions more broadly, do potentially think about risk in a way that is a little more aligned with businesspeople. This is because, in addition to thinking about legal risks (such as the probability of a clause being held unenforceable), they have to consider the real-world risk of non-performance.
But all lawyers tend to share an intuition about risk that sets them apart from businesspeople, namely that their job is to eliminate, or at least minimise, risk.
How businesspeople think about risk
This intuition is very different from how businesspeople think about risk. To an entrepreneur, risk is an inherent part of any business activity. All business activity requires an outlay of effort and/or capital, but the rewards are inherently uncertain. The public might not like the product, a warehouse fire might wipe out your stock, a supplier might not send you supplies on time… and so on. But the aim is to figure out which activities provide enough reward to offset the risks involved.
In other words, businesses choose the amount of risk they are willing to take. A businessperson could conceivably choose to take on more risk, if the rewards are disproportionately high.
Putting the business perspective and the legal perspective together
So how do you, as a young lawyer, serve a client when they want to do something risky, but your every instinct is to figure out how to reduce risk?
The first step is to recognize that your client has a certain risk appetite. Their industry will involve some inherent risks, and their business model may be predicated on taking more or less risk than their competitors. Figuring out how much risk your client is willing to take in general, will help you align the tone, tenor and solution set embedded in your advice, with what they need.
The second is to understand whether your matter fits within your client's overall operating model, or whether it represents one of the important exceptions. For example, you might find that in a particular supply chain, there is a certain baseline level of uncertainty around performance. In such a case, it would be unhelpful to spend lots of time crafting punitive mechanisms to ensure performance, when the industry norms already allow for a certain amount of risk. On the other hand, no matter what the industry, if the case concerns personal liability for the directors of the company, the opposite might be true. A client whose business model is based on taking large, calculated risks, will potentially be extra vigilant about how those risks impact their directors and officers.
With these two ideas in mind, it should be easier for you to see the big picture while working on your particular matter. You will be able to understand whether your job is to help eliminate or mitigate all the risks that you see, or whether it is to align those risks with the company's overall risk appetite.